Credit Box: Meaning in a Merchant Cash Advance
A credit box is the set of rules a funder uses to decide which files it will consider. It usually covers minimum monthly revenue, time in business, credit score range, number of open positions, industries it avoids and how many negative days it accepts.
What does credit box mean?
Every funder has a profile of the business it wants to fund. Files inside the box get a real look and an offer. Files outside it get declined quickly, often without much explanation. Funders also call it a buy box. Two funders can look at the same statements and reach opposite answers simply because their boxes differ.
Why does credit box matter to your business?
A decline from one funder isn't a verdict on your business. It usually means the file sat outside that funder's box on one or two rules. A broker's main job is to know which funders' boxes fit your file and send it only there, so you don't collect a string of declines and credit inquiries for nothing.
What rules sit in a typical credit box?
- Minimum monthly deposits.
- Minimum months in business.
- A cap on open advances.
- A cap on negative days or NSFs per month.
- Industries the funder won't write.
- A credit score floor for the owner.
How do you use a credit box to your advantage?
Before you send a file anywhere, know your own numbers: monthly deposits, months in business, open positions and recent negative days. With those in hand, a broker can tell you which boxes you fit in one conversation.
Where will you see it?
Rarely in writing, since most funders keep the details private. You see its effects in declines that name a reason, like "too many positions" or "revenue below minimum," and in offers that come back with conditions.
Which terms are related to credit box?
The full list is in the glossary. Owners ask about this in Do funders look at profit or revenue for an MCA?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.